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tv   Nightly Business Report  PBS  September 18, 2014 6:30pm-7:01pm PDT

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scotti . this is "nightly business report" with tyler mathisen and susie gharib. end of an era, oracle's co-founder and long-time ceo, larry ellison, is stepping down as chief executive. who is in and what is next for the software giant? ready or not. here comes who looks like the largest u.s. ipo ever, but there are pros and cons the way the company does business. and historic polls, scotland, deciding whether to go it alone, all this on "nightly business report," september 18th. good evening, more historic closes on the dow, thanks to a strong rally on wall street, but we begin tonight with stunning news about one of the world's
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richest men and most powerful chief executive. larry ellison, in a surprise move, the oracle ceo larry ellison announced he will step down as the executive of the board and chief technology officer in charge of software and hardware engineering functions. and stepping up as co-chief executive, company insiders and co-president, they came to oracle after being pushed out of hewlett-packard ceo. the move came out after the markets closed and shares fell on the news. john fort has more on the news. john, you have been covering all of this, what we do know about larry ellison is that he has been the only ceo of oracle in all of these years since he founded it. he is a micro-manager and likes
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to be in control. and this announcement means anything but. what is going on there. >> he likes to be in control, he doesn't necessarily go into oracle every day but has the engineers report to him and kept his hands on all the decisions. as executive chairman he will still be in control. ma mark heard and saffer cat, ellison looks good, but not getting any younger, he is pushing 70 years old, something like that had to happen. >> why now? >> part of it is the age thing, we see oracle in a time transition where they're moving into the cloud era. they have been successful in the hardware business where a lot of people thought they would fail. it has not grown as quickly but the margins are enormous. now they're taking on challenges like work day and sales force and they're bringing up the
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younger -- not exactly spring chickens either, but younger deputies -- >> is this -- has this been orderly, he didn't signal it. nobody signalled it. >> larry ellison doesn't necessarily play by the rules you expect from everybody else. he still owns around 20% of oracle. so he doesn't have to play by everybody else's rules. but if you watched the company you know that one of these two was probably going to take over for ellison. what surprised me is that katz took over, she said years ago she didn't want to be ceo, patient now. >> i think a lot will wonder -- it didn't work at goldman sachs or city, sandy wile and john read -- in >> larry is still in charge, as long as he is in charge he will keep things in line. all right, all the buzz about tomorrow's initial stock
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offering of alibaba shares, reportedly priced at $60 a share tonight, the top of the expected range and would make alibaba the largest u.s. ipo ever. but what do investors need to know about the ecommerce giant? what do people half a world away think about investing billions. >> reporter: to understand why the chinese government wants alibaba around look no further than the village here. it is one of dozens of what are farming communities, transformed thanks to new job opportunities created by the ecommerce giant's shopping site. this man used to sell bread, now he is an entrepreneur generating $8 million of sales for annual camping gear. he took nearby orders from
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factories in a small room he shared with his brother. >> some people from our village would think how odd, these brothers are always working very late every day. what are they up to? >> reporter: then other villagers asked for his advice. now, they can afford cars and homes by selling goods to china's increasingly wealthy consumers. the chinese government may praise alibaba for helping villagers get rich but international brands criticize it for backing businesses that rip off american labels. >> so does alibaba help counterfeiters reach a broader market? we decided to look into it. >> reporter: we found a shanghai vendor selling products our company doesn't authorize. the vendor told me he makes the goods in his factories even though he doesn't have authorization to use the logo. >> we are not authorized.
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there are very few who are authorized. >> reporter: i asked if alibaba wanted them to stop? >> no, no, if they want us to stop they will say so. >> reporter: in the recent filing the firm said it is taking down counterfeits and making it easier for brands to report infringement. alibaba, a company poised for a long-time future in china but on a path with unclear risks. so what happens when a company like alibaba decides to go public and begins to raise money by selling shares. here is a look at how the ipo comes together. >> the road to an initial public offering, ipo, unfolds over months and includes banks, lawyers, accountants, bscc and finally investors. first step, the company finds a bank that will underwrite the deal and ultimately sell the shares to the public.
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about six months before the actual ipo those bankers start writing up legal documents that begin to outline the deal. three months or more before the ipo. lawyers and accountants are decided upon. and bankers will begin to draft an s-1, the legal document required by the securities and exchange commission that will tell the world about the company. things like what it plans to do with the proceeds, the business model, the competition, corporate governance, risks and compensation, it is made public immediately, but for most ipos, it is made public once it is approved by the icc, two to three weeks before the ipo, the company launches a road show, basically a tour where it announces the number of shares being sold and at what price range. the goal? create demand for the stock by
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showing off a strong plan for growth that will make investors money. one day, before the ipo the bankers announce a final price and deal size. on the next day the stock finally goes public. now, the price is determined by investors on the open market. >> and to read more about how an ipo gets done go to our website nbr.com. and for more on the stock market rally investors felt confident today after the fed vowed yesterday to maintain its record-low interest rates for at least a considerable time. the stock jockeys got another boost after jobless claims fell last weekend, with that the dow shot up 109 points closing at a record high, 2,266. the s&p up ten, the nasdaq up
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500. jeff kleintop joins us to talk about the market, he is the chief global strategist. why did stocks go up today, jeff, to more record highs? >> i think it is a big record increasingly. it looks like the scots will vote no. we see it in the pound today. stocks in europe were up a full percent today, doubling. they were quite a bit up 1.3%. this has been a big issue on the minds of investors, separatists movements across the world, including ukraine. this one in scotland, and the big issue is the uncertainty it can create. >> now jeff, here i thought you were going to say it had to do with the federal reserve keeping interest rates in status quo. maybe alibaba, to what extent do those play to what is happening on the street? >> i think alibaba may be a
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one-stock story, it is a chinese retailer, take a look at the stocks in china, it has not really generated a lot of excitement with them. or internet retailers still suffering from relatively high valuations. they have been slumping, as well. the excitement about alibaba, not spreading to the market. i think that is a one-stock story. and the fed left everything status quo yesterday with their message and the economic data continuing to reinforce this idea that it is kind of a goldilocks environment, the economy, not too hot or cold, and withdrawing stimulus for the economy. >> you're the global strategist, what has the strongest stock prices over the next year? >> i think the emerging markets actually look the best. and particularly in asia, one thing we're seeing here as we get close to pre-announcement season is fear that we're going to hear what is happening from oracle. they missed expectations,
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whatever happened there. and the slowdown in europe and china having an effect on the corporate prospects. they're seeing much ramping up economic activity and ramping up profit growth and at very attractive valuations. >> jeff, what do you think is gog to drive markets from here now that the fed issue is sort of off the table? this ipo is going to be done. what are investors going to be focusing on? will it be earnings or something else? >> i think it will be earnings, assuming the scots vote no, otherwise all bets are off. the earnings this quarter were a bet of a messy one, and you have a number of shifting costs. so pre-announcement season, companies may report that they can't hit the targets they thought they could at the beginning of the season. no sign the bull market is over.
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>> all right, jeff, thank you very much. disappointing news about housing today, new home construction fell 15% in august far more than expected as builders put up fewer condos and apartment buildings. the good news, construction of single family homes held steady and the numbers were revised a bit higher. more now on the vote in scotland as the polls are closed. they are adding up the numbers to see if the majority of scotland decides to leave the u.k. and become an independent nation. michelle cabrera has more from edinburgh, scotland. >> reporter: scots woke up to a foggy morning as they head to the polls. 4.2 million people registered to vote in the referendum, nearly 97% of all eligible voters. record-breaking numbers are expected. there is only one question on
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the ballot? should scotland become an independent country? the yes vote, a passionate vote. many brought children and posed for pictures so they could experience a vote that could mean a huge change. >> we want to bring them to see if it goes through, we want our kids to remember this is part of something historic. and hopefully will change everything for the better, really. >> reporter: the no vote was about fear and potential negative economic fallout from breaking away from the united kingdom. >> i voted no because i have a 9 month-old son. and it is his future that we're playing wi here. and i kind of believe in the long-term, the uk is better.
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>> reporter: many were thinking about their children, including sir tom hunter, one of scotland's richest men. >> this is the biggest decision i will make in my lifetime and my kids' lifetime. me m the markets are set up for volatility if they're wrong. >> if there is a yes tomorrow the pounds could fall substantially and there could be some discount applied to not just scottish-based stocks but
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british ones compared to where we are today. >> as the scots head to the polls many saw newspapers like this, begging them not to leave. from london, the daily mirror, one headline said, don't leave us this way. for "nightly business report," michelle cabrera. and some in the national intelligence community are concerned. home depot tonight revealing just how big the recent credit card breach really was. the do it yourself chain says that data on 56 million
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card-holders are at risk after hackers got access to the retailer's payment system sometime between april and just earlier this month. home depot says also it has been able to eliminate the malware used in the breach. there is a lot of excitement about the brand-new apple iphone6 hitting stores tomorrow. but apple's new operating system comes with privacy protection that it says nobody will be able to access, not even law enforcement officials. that is a big worry for the intelligence community. so amon, what exactly did apple did that law enforcement officials and intelligence agencies are so frustrated? >> well, the big change here is that apple will no longer keep your password on happened, so the encryption on the system will be impossible to break into even if it wants to. that means if law enforcement goes to apple or the intelligence agency goes to apple with request for watching
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a specific target, apple can't honor that request. that is the thing that makes them very nervous about the u.s. tech companies sort of moving away and cooperating less frequently with the government. in fact, we had the director of national intelligence, james clapper here today speaking before a crowd. he said that this represents one of the big threats to the u.s. intelligence community. take a listen. >> the strategic environment also includes the recent factors that affect intelligence capabilities. what i have referred to on the hill as the perfect storm. that is dogging and degrading our capabilities. the leak of nasa and isc documents and loss of collection as a result. the resulting damage relationships with foreign and corporate partners. >> now, when clapper talks about corporate partners there he is not talking specifically about apple because the speech was
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presumably written before the breach. but they talks about the concern that they will have a lack of cooperation across the board going forward, guys. >> so amon, is this really the caption on this, how edward snowden changed american business? >> yeah, absolutely, the disclosures as you saw right there said by clapper really led a lot of american companies to reevaluate what their cooperation is with companies and if it raises their bottom line, it raises questions about the companies' responsibilities are to law enforcement and intelligence and to the united states versus to their customers. >> what is corporate america's obliga customers? >> you know, there is a legal answer to that question, which is that they have to follow the letter of the law and if they get a warrant and have the ability to turn over the information they have to do that. and then there is sort of a moral and political and ideological answer to the question that i'm not qualified to give you. but every company is wrestling with this.
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also the tax debate and whether companies should have the freedom of speech and should be able to participate in political campaigns, those are questions asked in a lot of areas. >> yes, we know that everybody in the country is so worried about their privacy and private information, as well. thank you so much. walmart is gearing up for the holidays announcing plans to hire 60,000 seasonal workers this year, about 10% more than it took on last year. target plans to hire 70,000 workers, same as last year. oracle was not the only company announcing ceo changes today. clorox has named dorer as its new ceo. he promises whiter whites. the outgoing chief will become executive chairman. and jetblue also is taking off. the airline's president robin hayes will take his place. shares popped. stock up just slightly. jetblue followed suit also
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spiking initially after the bell. well, conagra's company profits tripled, revenue in line with estimates. but the food producer said lower costs helped to off set that, the company said its cost-saving programs are having the desired effect. shares are up to $33.48. and rite aid also posted strong results for its second quarter earnings. they surged beating expectations as pharmacy sales helped to drive revenue higher. rite aid lowered the full year earnings outlook since it expects lower profits from generic drugs. shares fell 18.5% today to 5.41. analyst notes weighed on sears today, a retail expert at credit suisse is calling for the struggling department store toly
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liquidate, saying it is the end of the chain, he also says that keeping the chain up and running is taking money from the shareholders each year. shares fell to 528. and amazon showing new devices ranging from 3 to $380, they will begin to ship the products next month, shares rose slightly to $320. and kroger upping the payout. the company cited improving consumer confidence and the higher amount will be paid to shareholders in december. the stock was up slightly to 52.49. and coming up on the program, student loan debt is not just for the young. the surprising demographics that is drowning in debt at a time when they should be looking to retirement. that is next.
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audio in fourth, lockheed martin continue, long-time pepsi ceo is in third and second place, mary barra took over the steering wheel at gm earlier this year. and in the top spot for the third year in a row. ibm ceo jenny remetti. >> and finally tonight we end the show with more on tomorrow's initial public stock offering by alibaba. wall street may be buzzing about the ipo. and alibaba may indeed be a household name in china but as you see here in the u.s. a lot of people are not looking forward to its debut tomorrow. and many don't even know what alibaba is. >> alibaba? i have no idea. >> i have no clue. >> itgawas a character in?f1úm arabion character, dating back to the -- >> i don't know. >> i never -- a religious holiday or a person? >> something in asia. >> alibaba.com, a way to find
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all the products in china. >> alibaba is the chinese version of amazon. >> alibaba? where. >> a religious holiday? that is pretty good. >> i think one out of all of them knew what it was. >> you know in a few more days everybody will know what it was. that is "nightly business report," i'm susie gharib, thank you for joining us. >> and i'm tyler mathisen, thank you for joining us. have a great evening. we'll see you back here tomorrow. and we know what alibaba is. oad) they give three of us random people the keys to a bus.
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